Created on Wednesday, 13 March 2013
Written by CURT ANDERSON,Associated Press GARY FINEOUT,Associated Press

TALLAHASSEE, Fla. (AP) — An investigation of a purported veterans' charity in Florida led to the resignation of the state's lieutenant governor, who once did public relations for the nonprofit accused of using Internet cafes as a front for an illegal gambling operation.

Florida Lt. Gov. Jennifer Carroll's resignation, announced Wednesday, came as the owner of an Oklahoma software company and his wife were arrested and accused of supplying illegal gambling software to Allied Veterans of the World, a charity based in St. Augustine, Fla.

Carroll's public relations firm once represented Allied Veterans. Carroll, a Navy veteran who served in the Gulf War, appeared in a TV ad in 2011 promoting the organization's charitable work on behalf of veterans and their families. She has not been charged with any wrongdoing.

Carroll's resignation letter to Gov. Rick Scott offered no details about her reason for leaving, but the Republican governor's chief of staff, Adam Hollingsworth, said the 53-year-old Republican resigned to ensure her ties to the company would not be a distraction for the administration.

According to an Internal Revenue Service affidavit filed in federal court, Allied Veterans evolved from a charitable organization that ran bingo games and held bake sales for veterans beginning in 1979 to a group suspected of operating more than 40 illegal for-profit gambling locations around Florida. The veterans' charity was a fraud, according to the IRS.

"In an effort to mislead the public into believing that it is not profiting from an illegal gambling enterprise, Allied Veterans and others have engaged in a conspiracy and scheme to defraud," the affidavit said.

Carroll's aides said they had no immediate comment Wednesday.

From 2007 to early 2012, investigators found evidence of over $6 million in what appear to be charitable donations by Allied Veterans. That amount, however, was only about 2% of the over $290 million made from gambling operations during that time period. Instead of going to veterans, the vast majority of the money went to for-profit companies and the individuals who operated Allied Veterans and its so-called "affiliates."

To play games at one of the Internet cafes, a customer gets a prepaid card and then goes to a computer to play "sweepstakes." The games, with spinning wheels similar to slot machines, have names such as "Captain Cash," ''Lucky Shamrocks" and "Money Bunny," according to the IRS.

Winners go back to a cashier with their cards and cash out.

The games of chance have been the subject of much debate in Florida and some are legal as long as most of the profits are donated to charity.

While serving as a state lawmaker, Carroll's ties to the company were also questioned when she proposed a bill that would benefit Internet cafes. But the bill was withdrawn before the 2010 Legislative session started. She told the Florida Times-Union at the time that the bill was filed by a member of her staff without her approval.

The owner of the company accused of supplying the cafes with illegal gambling software was arrested Tuesday in Oklahoma. Chase Egan Burns, 37, faces charges of racketeering. He heads of Anadarko, Okla.-based International Internet Technologies, which made $63 million from the Florida operations for its software during 2007-2010, according to the IRS affidavit.

Burns and his wife, 38-year-old Kristin Burns, both face extradition to Florida. Burns' wife's role in the company was not immediately clear.

Chase Burns was released from the Caddo County jail on a $500,000 bond. He denied any wrongdoing.

"What we do is legal," he told The Oklahoman on Monday.

His father, Tony Burns, also serves as his attorney.

"That's was what his business was — providing the software. And there's nothing illegal about providing software to any business," Tony Burns said of his son.

Tony Burns did not return a call seeking comment from The Associated Press.

A telephone number listed for Allied Veterans in St. Augustine has been disconnected. Multiple emails sent by AP to an address listed on the group's website weren't returned.

Former Florida state Rep. Scott Plakon, a Republican, said he filed bills to shut down internet gaming sites in 2011 and 2012.

"I found that this is gambling, happening right next door to our Publix (grocery store) and dry cleaner and it just didn't seem right," he said.

The former lieutenant governor — who is the mother of Miami Dolphins defensive back Nolan Carroll — has been named in previous scandals.

Last year, a former Carroll aide, Carletha Cole, claimed to have found Carroll in a compromising position with a travel aide, a woman, inside's Carroll's office.

Cole is charged with violating state law for allegedly giving a recording of a conversation with Carroll's chief of staff to a newspaper reporter.

Cole said she was ordered by the travel aide to find adjoining hotel rooms for Carroll when they traveled. Carroll has said previously the allegations are an attempt by Cole and her attorney to get the criminal charges against Cole dropped.

Carroll, a married mother of three, became the brunt of late-night talk show hosts when she defended herself against the allegations, telling a Tampa Bay area TV station that black women who look like her "don't engage in relationships like that." She later apologized for the remarks, which implied that black lesbians are not attractive.

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Associated Press writers Kelli Kennedy in Miami and Tamara Lush in St. Petersburg contributed to this story.